Refinancing to net Detroit owner $50M

Detroit Tigers and Red Wings owner Michael Ilitch plans a major sports financing
that would personally net him roughly $50 million, according to several banking
sources familiar with the plan.

The $50 million is intended, in part, to help defray operating losses the Tigers
suffered in recent years and stadium construction cost overruns paid by Ilitch for
the team's new home, Comerica Park, sources said.

The money would come from a larger financing package sold by Ilitch's holding
company, Ilitch Ventures, that would refinance a $145 million stadium loan and a
roughly $45 million loan to its concessionaire.

Ilitch's money moves come as several troubling issues loom for MLB, not the least
of which is the prospect of a player strike or a lockout at the close of the 2001
season.

The financing will have to address such issues, as well as Ilitch's personal
use of the proceeds, said a banker who is seeking the financing assignment from
the Tigers. "It will be interesting to see if the wants and desires of ownership
are accommodated in the capital markets."

The planned financing is the most recent example of owners using their clubs
to obtain large sums of money without relinquishing control. Historically, the only
way owners could make money from their teams, and cover losses they incurred, was
to sell them.

But that has changed. Richard Jacobs issued public shares in the Cleveland Indians
in 1998 and netted $60 million before selling the club a year later and reaping
another bonanza. Earlier this year, YankeeNets sold $200 million of junk bonds,
the proceeds of which went directly into the pockets of the Yankees' and Nets' owners.

And just last week, Miami Dolphins owner Wayne Huizenga said he was seeking minority
investors, which would help him capitalize on NFL franchises' skyrocketing values
without ceding control.

That owners can raise such prodigious sums is a testament to financial markets'
increasing willingness to accept as collateral the rising tide of revenue now generated
in sports.

While the details of Ilitch's financing are not set, the money he raises would
almost surely be backed, in part, by team and stadium revenue. The team
pays no rent at Comerica but receives all the revenue.

N/A
— not available
*Ilitch Ventures also owns the Detroit Rockers of the National Professional
Soccer League. It is unclear whether the club carries any debt.
Source: Street & Smith's SportsBusiness Journal research

Ilitch's "is the kind of financial transaction that we will see more of, whereby
a team owner uses the cash flow from a new facility as support for a debt instrument,
which allows him to get available cash without giving up control," said Marc Ganis,
president of Sportscorp Ltd., a sports business advisory firm.

Ilitch Ventures, the holding company that controls Ilitch's sports assets, Little
Caesars and his concessionaire, Olympia Entertainment, is deciding which bank to
hire to arrange the financing package, which could approach $250 million.

The package would refinance a $145 million loan from Sumitomo Bank that the Tigers
used to fund Comerica Park and a roughly $45 million loan from FleetBoston Financial
to Olympia, the banking sources said. The Tigers also have a roughly $45 million
loan outstanding from the MLB credit facility, but with terms that are good enough
to make a refinancing less necessary.

Comerica Park's $361 million price tag was $100 million more than expected, and
Ilitch funded $75 million of the overruns with cash and loans, according to a report
earlier this month in the Detroit Free Press.